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Multilateral Newsletter - May 2016

This edition of the Multilateral Newsletter summarizes the key highlights of the OECD Week 2016. In addition, it also provides brief information on happenings at the B20 Coalition, International Trade Centre, World Bank and Asian Development Bank (ADB).

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Multilateral Newsletter - May 2016

  1. 1. 1Multilateral Newsletter this IssueInside Focus Story OECD WEEK 2016................................................................2 Key Highlights of the BIAC Statement to the OECD Ministerial Council Meeting 2016........................................3 OECD Global economy stuck in low-growth trap: Policymakers need to act to keep promises, OECD says in latest Economic Outlook����������������������������������������������������������������� 6 BIAC Business Releases Ten Recommendations to OECD Ministers for Productivity and Growth..................................7 Business calls for a Coordinated G20 Approach to Financing SMEs in Global Markets.......................................7 May 2016, Volume 3, Issue 9 Message from Mr Chandrajit Banerjee, Director General, CII Dealing with social challenges faced by the major economies require solutions that aim at generation of employment, better quality jobs along with the assurance of effective and efficient provision of services to the public. In today’s scenario it is important to examine the solutions that can act as a master key to challenges that the major economies face. The OECD Week 2016 placed a central emphasis on the need for policies that strengthen productivity, promote inclusive and sustainable growth. Addressing the inequality issue is essential to ensure more productive economies while allaying conventional fears that increasing productivity means working for a longer duration in life. The OECD Week constituted of the OECD Forum which also included the meeting of the OECD Council at Ministerial Level and many other meetings linked to G20/B20 and L20 forums. The global industry voice was well represented in the OECD Week. The OECD Economic Outlook launched during the Ministerial Council offers perspective on the fundamental reasons for the current weakness in global growth. The Ministers adopted a Declaration on Enhancing Productivity for Inclusive Growth featuring the necessary policy responses, among others and a strong plea to “promote measures to ensure a level-playing field for business by assessing the factors affecting the well-functioning of markets and market entry or exit in specific markets, including those associated with RD support, regulation, obstacles to trade and foreign investment, competition and taxation. The Ministers stressed the need to enable firms to thrive, recognizing the particular importance of trade and investment for productivity and inclusive growth. The latest edition of the Multilateral Newsletter provides insight into the happenings at the OECD Week 2016 and focuses on the 10 business recommendations for Productivity, Prosperity and Inclusive Growth submitted by BIAC at the OECD Ministerial Council Meeting 2016. Chandrajit Banerjee Multilateral B20 Coalition New Presidency for B20 Coalition announced at 3rd Plenary Meet�8 B20 Coalition calls for G20 to address Resource Efficiency�������9 ITC Bringing SMEs onto the e-Commerce Highway������������������������10 World Bank Reaction to the G7 Summit Communique from World Bank Group President Jim Yong Kim�������������������������������������������������11 ADB As Economic Growth Slows in Much of Asia, Powerhouse India Bucks the Trend���������������������������������������������������������������12 Scaling New Heights: Vizag-Chennai Industrial Corridor, India’s First Coastal Corridor���������������������������������������������������������������13 NEWSLETTER
  2. 2. 2 Multilateral Newsletter The OECD Week 2016 placed a central emphasis on the need for policies that strengthen productivity and promote inclusive and sustainable growth, while allaying fears that increasing productivity just means working longer, harder and later in life. Since the economic crisis, productivity growth has slowed and inequality has been getting worse. Growth in advanced economies remains weak, while key emerging economies continue to slow down or are facing recession. Global GDP will grow by 3% in 2016 and will only see a modest improvement in 2017. The ILO has reported that global unemployment is growing again, reaching 197 million in 2015, 1 million more than in 2014. Youth unemployment is still above pre-crisis levels in almost all the countries. Addressing inequality is essential to ensuring more productive economies while allaying conventional fears that increasing productivity means working longer, harder and later in life. Low productivity levels contribute to income and wealth disparities, as well as growing divergence in other well- being dimensions (education, health, jobs).This is compounded by “legacies” arising from the global financial crisis –continuing high unemployment, particularly amongst young people, and low investment (including RD) - all of which negatively impact productivity growth and fuel serious concerns over the current states of economies. The weakness which exists in the economy today results from the combination of two simultaneous trends: the slowdown in productivity growth and the rise of inequalities. There lies a need to take decisive action for reform. Entrepreneurship is central to productive economies and inclusive growth. With the appropriate policies in place, businesses are encouraged to invest, trade, innovate and create jobs. Yet companies of all sizes continue to encounter significant policy uncertainties and regulatory burdens that constrain their business activities. Expectations for global economic growth in 2016 has been downgraded to a five year low, sparking concerns that countries at the risk of slowdown may resort to protectionist and interventionist measures. Facing the period of great vulnerability, there is need to promote consistent and evidence-based policies that support the competitiveness of economies and contribute to more robust and inclusive growth. Recognizing that the monetary and fiscal policies have their limits, governments and their administration must implement structural policies that will lead to an era of greater growth built on private investment, competition and more productivity. While the specific policies vary by country, priority areas include sound and well-coordinated regulatory processes, effective competition policy, long term investment in infrastructure, skills development, more flexible product and labor markets, investment friendly tax regimes, and support for RD, among others. Recognizing the slowdown in the pace of implementation in recent years, BIAC encourages OECD to work with countries and business communities to build the case for structural reform- essential for achieving the G20’s additional 2% growth scenario by 2018 and ensure that growth is inclusive. In addition, it is as important for governments to work with the OECD to build a comprehensive and internationally comparable database on productivity-enhancing impacts of reforms. Focus Story OECD WEEK 2016
  3. 3. 3Multilateral Newsletter 10 Business Recommendations for Productivity, Prosperity and Inclusive Growth • Create the policy condition conducive to investment Domestic and Foreign investment is indispensable to productive and inclusive growth in advanced and emerging markets alike. Without investment, the Sustainable Development Goals and commitments to implementing the Paris Agreement on Climate Change cannot be achieved. Without investment, serious unemployment in many countries, including for youth, cannot be overcome. Thus it becomes important for the policy makers to fully implement the updated OECD Policy Framework for Investment (PFI) to build conducive investment environments, with due attention to the rule of law, well-functioning dispute settlement, adequate and effective protection of property rights-including intellectual property rights (IPR) and assurances of fair and non-discriminatory treatment of all investors, including state-owned enterprises (SOEs). As SOEs increase their international investment, it is important for the OECD and governments to counter distortions to competition and ensure a level playing field in global markets. • Address barriers to cross-border trade and investment Based on OECD analysis, governments should do more to promote open markets for trade and investment, and should communicate their benefits more forcefully, notably in the areas of trade facilitation, trade in services and freedom of investment. Trade and investment agreements that provide enforceable commitments by governments to private investors are critical. International investment agreements (IIAs), including an efficient and effective Investor-State Dispute Settlement (ISDS) mechanism, provide legal protection for investors. Implementation of the OECD’s G20 mandated work on base erosion and profit sharing (BEPS) should reflect the consensus reached during the project to achieve consistency between better jurisdictions, and should take further steps to resolve disputes between tax authorities, thereby fostering cross-border trade and investment. OECD work addressing forced localization, including data localization, is vital and it is important to encourage policies that address security and privacy concerns in the least trade-distorting manner. • Establish an effective process for regulatory policy and international coordination Businesses need stable, transparent, predictable, and consistent legal frameworks. Effective regulatory consultation processes, well-conducted impact assessments, and a strong involvement of relevant stakeholders in independent evaluation are essential. The impact of the 2012 OECD Recommendation on Regulatory Policy and Governance and the recent OECD Regulatory Policy Outlook depends on proper implementation of good regulatory practices. This will also serve to combat corruption, where additional OECD efforts to address the demand side of bribery, support and recognize voluntary anti-bribery efforts by firms and incentivize self- reporting. For low income countries in particular, an effective regulatory environment contributes to greater formalization of the economy, serving to broaden governments’ tax base and sources of revenue. Regulatory cooperation between countries –such as through harmonization and mutual recognition of technical regulations and standards-will contribute greatly to the facilitation of cross-border trade and investment. Continued OECD work to estimate the costs incurred by diverging national regulations would be valuable in this regard. Focus Story Key Highlights of the BIAC Statement to the OECD Ministerial Council Meeting 2016
  4. 4. 4 Multilateral Newsletter Focus Story • Encourage Entrepreneurship Entrepreneurship is one of the single biggest sources of productivity, employment and inclusiveness. Start- ups, SMEs and large companies operate as entrepreneurs in our economies by taking risks, innovating and creating new businesses and jobs to serve new markets. As smaller firms depend on competitive level playing field, OECD work in benchmarking of SME performance in markets, including barriers to firm entry/ exit, administrative burdens, and women’s entrepreneurship. OECD analysis should include measures that promote entrepreneurship skills-such as legal, managerial, financial and digital skills. The critical role of digital technologies in supporting the growth of smaller firms should also be subject to further OECD work. • Enhance Access to Finance The pro-stability financial regulations introduced in recent years and their cumulative impacts have also had significant unintended consequences on the availability of bank credit, notably for SMEs. This is a constraint to the ability of companies to engage in productivity-enhancing investments. Addressing this situation calls for the proper coordination and calibration of financial regulations, as well as greater understanding of the opportunities and risks presented by alternative sources of financing. The OECD should deepen its work with the Financial Stability Board and other international bodies to examine financial regulatory regimes at national, regional and global levels, their degree of coordination and coherence, and their consequences for economic growth. There lies a need to devote attention to financing SMEs in global value chains, long-term financing in infrastructure, greener financing for sustainable growth, and greater use of risk-mitigating instruments to leverage private investment into developing markets-all of which are vital for productivity and inclusiveness. • Enable Innovation and Technology Economy Innovation is also central to sustainable development, new production processes, greener growth and efforts to implement the Paris Agreement on Climate Change. Innovations and their spread through economies are vital for productivity growth and can provide fresh opportunities for firms and individuals to participate in markets and societies. To seize the benefits of innovation, the OECD should promote whole-of-government policy frameworks that support the development of innovative firms of all sizes; sustained and diversified forms of investment; adequate and effective IPR regimes in accordance with internationally established IPR policies; initiatives for entrepreneurship skills and RD collaboration between firms and universities; and greater access to global value chains. While addressing legitimate privacy and security concerns, better access to global value chains will also depend on the freer flow of information and data across borders, serving to quicken the spread of knowledge and innovations. The use of tax incentives may also be considered to encourage innovation as part of predictable, efficient and stable tax regime. • Promote Lifelong Learning To ensure that the education systems adapt to rapidly changing needs and support participation in our economies and societies, the OECD should encourage governments to review their education curricula and promote high quality lifelong learning with equal attention to: advanced areas of knowledge (e.g. technology and engineering, including robotics, biotechnology and entrepreneurship); skills (e.g. creativity, critical thinking. Communication and collaboration); and character qualities for the workplace (e.g. ethics and leadership). In parallel, strengthened teaching quality and training should be encouraged, including fir vocational education and training (VET) and school management. The OECD should also be a platform for sharing good practices for closer cooperation between education policymakers, education providers and employers.
  5. 5. 5Multilateral Newsletter Focus Story • Encourge Labor Market Flexibility and Resilience Employers and employees are challenged to respond to rapid changes in technologies and markets. High barriers to labor mobility, including excessive employment protection legislation, pose a serious impediment for job creation in the 21st century. Business calls for both flexibility enhancing reforms and accompanying measures, such as active labor market poilcies (ALMPs). This should enable individuals to adapt to more productive sectors and jobs in the longer-term while mitigating short-term costs of change. Measures to improve gender equality in labor force participation, tackling youth unemployment and the integration of migrants in labor markets should also be priorities. • Support Responsible Business Conduct Across All Economies As 2016 marks the 40th anniversary of its Declaration on International Investment and Multinational Enterprises, BIAC calls on the OECD to work with business and continue to address investment and responsible business conduct in a balanced manner. • Recognizing The Importance of Health For Productive Societies Global health challenges are no longer single government agency topics-they are complex and involve a variety of stakeholders, including the private sector. To support economic growth, it is crucial to have healthy workforces and communities. Effective strategies for health and wellness must involve all levels of government as well as stakeholders. The private sector plays a vital role in advancing innovation and partnerships for health promotion, disease prevention and treatment, education and home based care. The private sector is at the forefront of the development of new solutions that contribute to sustainable healthcare systems and reduced health inequalities, and develops technologies which provide safer and cost-effective solutions. BIAC encourages the OECD to deepen evidence based work, support countries in developing best practices to enhance health literacy, promote healthy and active lifestyles for all ages and to fully consider the potential for innovation to address new demographic challenges. The 10 recommendations listed above by BIAC to the OECD strategic direction and activities. Action in these areas are fundamental for growth that is stronger, more sustainable and ultimately more inclusive to enable companies and people to fully participate in our economies.
  6. 6. 6 Multilateral Newsletter OECD Global economy stuck in low-growth trap: Policymakers need to act to keep promises, OECD says in latest Economic Outlook The global economy is stuck in a low growth trap that will require more coordinated and comprehensive use of fiscal, monetary and structural policies to move higher growth path and ensure that promises are kept to both young and old, according to the OECD’s latest Global Economic Outlook. “Growth is flat in the advanced economies and has slowed in many of the emerging economies that have been the global locomotive since the crisis,” OECD Secretary General Angel Gurria said while launching the outlook during the annual Ministerial Council Meeting and Forum in Paris. He added that slower productivity growth and rising inequality pose further challenges. Comprehensive policy action is needed to get off the disappointing growth path and propel economies to level that satisfy living standards for all. Weak trade growth, sluggish investment, subdued wages and slower activity in key emerging markets will all contribute to modest global GDP growth of 3% in 2016, essentially the same level as in 2015. According to the outlook, Global recovery is expected to improve only by 3.3% in 2017. With rebalancing continuing in China, growth is expected to continue to drift lower to 6.5% in 2016 and 6.2% in 2017, supported by demand stimulus. India’s growth rates are expected to hover near 7.5% this year and next, but many emerging market economies continue to lose momentum. The deep recessions in Russia and Brazil will persist, with Brazil expected to contract by 4.3% in 2016 and 1.7% in 2017. Among other major advanced economies, the moderate recovery will continue in the United States, which is projected to grow by 1.8% in 2016 and 2.2% in 2017. The euro area will improve slowly with growth of 1.6% in 2016 and 1.7% in 2017. In Japan, growth is projected at 0.7% in 2016 and 0.4% in 2017. The 34 country OECD area is projected to grow by 1.8% in 2016 and 2.1% in 2017, according to the Outlook. Many countries have room for fiscal policies to strengthen activity via public investment, especially as low long-term interest rates have effectively increased fiscal space. While almost all countries have scope to reallocate public spending towards more growth-friendly projects, collective action across economies to raise public investment in projects with a high growth impact would boost demand and improve fiscal sustainability. Given the weak global economy and the backdrop of rising income inequality in many countries, more ambitious structural reforms- in particular targeting service sectors-can boost demand in the short-term and promote long- term improvements in employment, productivity growth and inclusiveness. The OECD highlights a series of policy requirements, including more comprehensive use of fiscal policy and revived structural reforms to break out of the low-growth trap. The Outlook argues that reliance on monetary policy alone cannot deliver satisfactory growth and inflation. Additional monetary policy easing could now prove to be less effective than in the past and even counterproductive in some circumstances. Click here for more information
  7. 7. 7Multilateral Newsletter Business Releases Ten Recommendations to OECD Ministers for Productivity and Growth Business calls for a Coordinated G20 Approach to Financing SMEs in Global Markets BIAC Addressing the annual OECD Ministerial Council Meeting, BIAC Chairman Phil O’Reilly pointed to the pressing need to implement structural reforms for the competitiveness and productivity of our economies. “Governments must recognize the fundamental role of entrepreneurship and open markets if we want to lift the growth potential of our economies, strengthen productivity, and as a consequence create more jobs,” said O’Reilly. Click here for more information “Our economies depend on more comprehensive, consistent and coordinated G20 and B20 action to enhance SME financing in global value chains,” said Phil O’ Reilly, BIAC Chairman, addressing government and business representatives at the OECD Headquarters in Paris. Building on earlier work undertaken during the Turkish G20 Presidency last year, BIAC convened a roundtable on Financing SMEs in Global Value Chains, co-hosted with the OECD, B20 China, World SME Forum and SME Finance Forum. Small and Medium- sized enterprises (SMEs) account for the vast majority of businesses, employment and value-added worldwide, but millions of them lack the financing they need to invest, trade, innovate and create new jobs. From business perspective, key consideration are Improved regulatory coordination and impact assessment• More seamless approaches for financing SMEs throughout value• chains; Actions by governments and businesses to seize opportunities and mitigate risks associated with emerging• phenomena including digitalization of finance and greener finance These issues will be developed in BIAC’s forthcoming publication in contribution to the G20 Leaders’ Summit in September. Click here for more information “Improvement in cross- border and cross-policy coordination for financial market regulatory regimes is needed to better support SME Financing. There is a need to avoid a shifting maze of rules that will discourage businesses to tap into credit for investment, innovation and ultimately more employment” Gianluca Riccio Vice-Chair BIAC Finance Task Force
  8. 8. 8 Multilateral Newsletter The B20 Coalition, the largest forum for business federations from across G20 members, has announced that the Federation of German Industries (BDI) will assume the Presidency of the group from June 02, 2016. Formed in 2012, the B20 Coalition is a unique broad-based network that operates as a worldwide platform of exchanges between national business communities in G20 countries, aimed at building consensus and developing common positions on critical issues for enterprises. The Federation of German Industries (BDI), represented by Mr. Ulrich Grillo, takes over the Presidency from the Canadian Chamber of Commerce (CCC), which has held the post since October 2013, under the strong leadership of the Hon. Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. Speaking from Paris, where the Chairs of the B20 Coalition are holding their 3rd Plenary Meeting, at which they reviewed the main policy and economic trends at stake in their own markets, Mr. Beatty said, “The challenges of building a strong, resilient global economy cannot be tackled by a single country or its business organization. By pooling our efforts and resources as members of the B20 Coalition, we were able to take coordinated positions that were beneficial to all and express them with a single voice. I am very proud of the progress we have made towards worldwide economic growth by working together, something that will continue under BDI’s leadership. I am proud to pass on the presidency of such an active and influential organization, and the Canadian Chamber of Commerce and I look forward to continuing our contribution to the B20 Coalition.” The BDI takes on the Presidency at a time of vigorous activity for the B20 Coalition, as a major thrust from the group in the field of Digital Economy is about to be followed by a strategic initiative to address the multiple challenges and opportunities related to Resource Efficiency and the Circular Economy. In accepting the Presidency role, Mr. Grillo, on behalf of BDI said, “To a large extent, our prosperity depends on global developments that cannot be governed at the national level alone – be it free and fair trade, the digitalization of the world economy or sustainable use of resources. Global challenges and opportunities require cross-border coordination and joint actions. Global governance is thus of the utmost importance to us. The G20 is a cornerstone in this regard as the premier forum for international economic cooperation. Business has a fundamental responsibility in co-shaping, facilitating and implementing global governance. The B20 Coalition is a key player in this area.” Click here for more information New Presidency for B20 Coalition announced at 3rd Plenary Meet B20 Coalition
  9. 9. 9Multilateral Newsletter On the occasion of their 3rd Plenary Meeting, the leaders of the B20 Coalition met to discuss future strategies for the global business community and announced Resource Efficiency as a new priority for the Coalition and as a follow-up to the work accomplished by the group in the field of Digital Economy. Founded in 2012, the B20 Coalition comprises 15 leading business associations from G20 countries, advocates on behalf of more than 6.8 million small, medium and large companies, and operates as an international platform, with the aim of fostering cooperation between national business communities and building common positions on critical issues for enterprises. Mr. Ulrich Grillo, President of the Federation of German Industries (BDI), which holds the B20 Coalition Presidency, stated, “Due to the different cultural, societal, economic and politico-legal frameworks existing around the world, there is a vast difference in the understanding and implementation of Resource Efficiency among businesses and countries. Hence, there is a need to develop a common international framework of understanding and to launch new initiatives to boost international cooperation in Resource Efficiency.” Following its recommendations on Industrial Internet, IT Security, ICT Standards and Smart Cities in 2015, the B20 Coalition acknowledges the potential and importance of Resource Efficiency and the Circular Economy in enabling businesses to reduce costs, overcome problems associated with scarce resources, boost innovation and competitiveness and contribute to Sustainable Development. Accordingly, the Coalition has made Resource Efficiency its priority and will work towards fostering its adoption and implementation on a global scale. The B20 Coalition emphasized that as the premier forum for international economic cooperation the G20 needs to address this crucial issue. Mr. Grillo added, “Resource Efficiency is crucial for the competitiveness of industries, for economic growth and employment. Sustainability efforts can spur the efficient use of natural resources through innovation rather than new constraints on business. In this context, the B20 Coalition envisions the creation of a dedicated Platform on Resource Efficiency to help create a space for companies where they can share knowledge on technical developments and create information networks.” Click here for more information B20 Coalition calls for G20 to address Resource Efficiency B20 Coalition
  10. 10. 10 Multilateral Newsletter E-commerce across borders is transforming the business world in developed countries – a trend that could galvanize small firms in developing countries and help them leapfrog into global markets. But if these SMEs are to seize the opportunities, several key policy challenges have to be addressed, as outlined in a new International Trade Centre (ITC) report. The report, Bringing SMEs onto the e-Commerce Highway, launched at the China Beijing International Fair for Trade in Services (CIFTIS), during a high-level forum on E-Commerce Dialogue: G20 Policy Options, which ITC organized with the China Council for the Promotion of International Trade (CCPIT) and B20 China. The report examines challenges in the four components of e-commerce: establishing online business, international e-payment, international delivery, and aftersales. It gives examples of best practices and provides a checklist for success. At the firm level, the report finds that competitiveness depends on being tech-savvy and dealing directly with foreign customers. A competitive business environment depends on affordable Internet access, access to online e-commerce platforms, access to international e-payment services, and access to express delivery services. Both domestically and internationally, e-signature recognition is crucial, as is consumer and data protection. These points are driven home by four young e-entrepreneurs from developing countries, who describe in their own words how their businesses were helped, or hindered, by national and international e-commerce policies. The report closes with a global overview of cross-border e-commerce and detailed e-commerce country profiles in the BRICS and three emerging markets. While the main features of each market vary, as does the regulatory environment, the key challenges – from intellectual property protection and taxation to logistical hurdles and restrictions on e-payments abroad – are largely shared by them all. Click here for more information Bringing SMEs onto the e-Commerce Highway ITC publication explores transformative effect of e-commerce sets out challenges and opportunities for SMEs ITC
  11. 11. 11Multilateral Newsletter Reaction to the G7 Summit Communique from World Bank Group President Jim Yong Kim The World Bank Group issued the statement from World Bank Group president Jim Yong Kim in reaction to the G7 Leaders’ Summit Communique. The key highlights of the statement issued are stated below G7 leaders took a major step toward protecting the world against pandemics by supporting the launch of¾¾ the  Pandemic Emergency Financing Facility (PEF). During the Ebola crisis, it has been learned that there was no effective international system in place ready to respond quickly to the threat of a pandemic, which pose a serious risk to global health and economic security. The G7 Summit last year in Germany, leaders were keen to develop a financial mechanism to help countries¾¾ respond much more quickly to deadly outbreaks. Working closely with the World Health Organization, the private sector, and many development partners, the World Bank Group has delivered on the G7’s challenge. This rigorous, market-ready instrument will for the first time create a new market for pandemic risk insurance, and ensure that resources get to the right place at the right time to the sites of outbreaks before they spin out of control. One of the key benefits of the PEF is that it will encourage countries and their development partners to¾¾ make critical investments in outbreak preparedness and health system strengthening, toward the goal of universal health coverage (UHC). G7 leaders have rightly signalled the vital importance of these investments, which are a priority for IDA,¾¾ the World Bank Group’s fund for the poorest countries. On Migration and Refugees: Managing the refugee crisis and other global risks is a critical development¾¾ challenge given its protracted nature. At the recent World Humanitarian Summit convened by UN Secretary- General Ban Ki-moon, the World Bank Group announced with six other multilateral development banks our full commitment to the forced displacement crisis, including joint action on data and evidence, country-level engagements, and innovative financing mechanisms. The MENA financing facility and are now working on a global crisis response platform, which would provide¾¾ resources to low- and middle-income countries hosting refugees across the world. We look forward to working with humanitarian and other partners in new and complementary ways to do better with what we have, and have more to do even better. Click here for more information World Bank
  12. 12. 12 Multilateral Newsletter ADB Despite slower growth in the People’s Republic of China that is having an impact in many countries across Asia, India’s booming economy is expected to grow at near 8% by 2017, according to the Asian Development Bank’s Asian Development Outlook 2016. The region’s two giants are headed in opposing directions, with the People’s Republic of China slowing down as growth in India picks up, the report noted. The People’s Republic of China is in the midst of a structural shift in its economy from manufacturing toward greater consumption and these changes are slowing down the economy. In India, initiatives by the government and rising income levels are boosting factory investments, leading to continued high economic growth. As People’s Republic of China policy makers pursue a smooth transition to more moderate growth, their Indian counterparts strive to maximize growth, the report noted. Driving growth for South Asia The strength of India’s economy is also driving regional growth. South Asia is forecast to post the most rapid growth of all developing country regions in Asia. Economic growth in South Asia accelerated to 7.0% in 2015 and is expected to accelerate further to 7.3% in 2017. India is the clear economic bright spot in the region. Apart from weakness in export demand, other economies in the sub region face unique challenges to growth: a devastating earthquake and a political standoff in Nepal, a drop in high-end tourism in the Maldives, and much-needed fiscal reform to deal with a build-up of excessive debt in Sri Lanka, the report noted. In India, where services have been a major driver of the economy, manufacturing and industry are now picking up. After growing by 5.9% in 2014, industry accelerated further to 7.3% in 2015. Manufacturing growth rebounded to 9.5%, helped by lower input costs for factories. Robust government spending on infrastructure – helped by lower fuel subsidies – and consumption among city dwellers remain the powerful forces in the economy and are expected to bolster growth in the future. In rural areas, the amount of rain that falls on farmers’ crops during the monsoon season is vital to driving rural spending and consumption. Click here for more information Economic Growth Slows in Much of Asia, Powerhouse India Bucks the Trend “As People’s Republic of China policy makers pursue a smooth transition to more moderate growth, their Indian counterparts strive to maximize growth.” Asian Development Outlook 2016
  13. 13. 13Multilateral Newsletter Scaling New Heights: Vizag-Chennai Industrial Corridor, India’s First Coastal Corridor India's first coastal economic corridor can help unify the country's domestic market, integrate its economy with Asia's global value chains, and support the Made in India initiative to spur manufacturing. Spanning more than 800 Kilometers of India’s eastern coastline, the Vizag–Chennai Industrial Corridor (VCIC) is part of the country’s East Coast Economic Corridor. This initiative can help unify the large domestic market as well as integrate the Indian economy with the dynamic global value chains of Asia and drive India’s Act East policy. VCIC will also be an important component of the government’s Make in India campaign to attract foreign investors and encourage the creation of manufacturing hubs in the country. The new industrial corridor is expected to spur growth by augmenting existing investment in world-class transport networks, infrastructure, and industrial and urban clusters that are supported by a robust institutional framework and a competitive business environment. By linking areas that are lagging in development with dynamic industrial and urban clusters, VCIC will create employment opportunities that alleviate poverty and reduce inequality. As a coastal corridor, VCIC can provide multiple access points to international gateways. Greater connectivity and economic integration between South Asia and the rest of Asia is likely to contribute significantly to development and foster regional cooperation as well. Click here for more information ADB Copyright © 2016 by Confederation of Indian Industry (CII), All rights reserved. No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. However, in case of any discrepancy, error, etc., same may please be brought to the notice of CII for appropriate corrections. Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi-110003 (INDIA) Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in For suggestions please write to us at: multilateralforums@cii.in